515B.5 - DUTIES AND POWERS OF THE ASSOCIATION.

        515B.5  DUTIES AND POWERS OF THE ASSOCIATION.         1.  The association shall:         a.  Be obligated to pay covered claims existing prior to the      final order of liquidation and arising within thirty days after the      final order of liquidation, or before the policy expiration date if      less than thirty days after the final order of liquidation, or before      the insured replaces the policy or causes its cancellation, if the      insured does so within thirty days of the final order of liquidation.      Such obligation shall be satisfied by paying to the claimant an      amount as follows:         (1)  The full amount of a covered claim for benefits under a      workers' compensation insurance coverage.         (2)  An amount in excess of one hundred dollars but not exceeding      ten thousand dollars per policy for a covered claim for the return of      unearned premium.         (3)  An amount not exceeding the lesser of the policy limits or      three hundred thousand dollars per claim for all covered claims for      all damages arising out of any one or series of accidents,      occurrences, or incidents, regardless of the number of persons making      claims or the number of applicable policies.         b.  Be obligated to pay covered claims subject to a limitation      as established by the rights, duties, and obligations under the      policy of the insolvent insurer.  However, the association is not      obligated to pay a claimant an amount in excess of the obligation      under the policy of the insolvent insurer, regardless of whether such      claim is based on contract or tort.         c.  Assess member insurers amounts necessary to pay the      obligations of the association under paragraph "a" of this      subsection subsequent to an insolvency, the expenses of handling      covered claims subsequent to an insolvency, the cost of examinations      under section 515B.10, and other expenses authorized by this chapter.      The assessment of each member insurer shall be in the proportion that      the net direct written premiums of the member insurer for the      preceding calendar year bear to the net direct written premiums of      all member insurers for the preceding calendar year.  Each member      insurer shall be notified of the assessment not later than thirty      days before it is due.  No member insurer may be assessed in any year      an amount greater than two percent of that member insurer's net      direct written premiums for the preceding calendar year.  If the      maximum assessment, together with the other assets of the      association, does not provide in any one year an amount sufficient to      make all necessary payments, the funds available shall be prorated      and the unpaid portion shall be paid as soon as funds become      available.  The association may exempt or defer, in whole or in part,      the assessment of any member insurer if the assessment would cause      the member insurer's financial statement to reflect amounts of      capital or surplus less than the minimum amounts required for a      certificate of authority by any jurisdiction in which the member      insurer is authorized to transact insurance.  Each member insurer      serving as a servicing facility pursuant to this section may set off      against any assessment, authorized payments made on covered claims      and expenses incurred in the payment of such claims by the member      insurer. In addition, the association shall have the authority to      levy an administrative assessment of not more than fifty dollars per      year per member insurer on a non pro rata basis, which assessment      shall be credited against any future insolvency assessment. Such      assessment shall be used to pay authorized expenses not directly      attributable to any particular insolvency or insolvent insurer.  All      overdue and unpaid assessments shall draw interest at the rate of      seven percent per annum.         The association shall also have the right to pursue and retain for      its own account salvage and subrogation recoverable on paid covered      claim obligations.  An obligation of the association to defend an      insured shall cease upon the association's payment or tender to an      excess insurer of an amount equal to the lesser of the association's      covered claim obligation or the applicable policy limits.         d.  Investigate claims brought against the association and      adjust, compromise, settle, and pay covered claims to the extent of      the association's obligations on covered claims and deny all other      claims.  The association may review settlements, releases, and      judgments to which the insolvent insurer or its insureds were parties      to determine the extent to which settlements, releases, and judgments      may properly be contested, and, to that end, any uncontested or      default judgment against the insolvent insurer or its insured shall      not be binding on the association.  The association shall have the      right to appoint or substitute legal counsel retained to defend      insureds on covered claims.         e.  Notify such persons as the commissioner directs under      section 515B.7, subsection 2, paragraph "a".         f.  Process claims through its employees or through one or      more member insurers or other persons designated as servicing      facilities.  Designation of a servicing facility is subject to the      approval of the commissioner, but such designation may be declined by      a member insurer.         g.  Reimburse each servicing facility for obligations of the      association paid by the facility and for expenses incurred by the      facility while handling claims on behalf of the association, and pay      the other expenses of the association authorized by this chapter.         2.  The association may:         a.  Appear in, defend, and appeal any action on a claim      brought against the association.         b.  Employ or retain persons necessary to handle claims and      perform other duties of the association.         c.  Borrow funds necessary to effect the purposes of this      chapter in accord with the plan of operation.         d.  Sue or be sued.         e.  Negotiate and become a party to contracts necessary to      carry out the purpose of this chapter.         f.  Perform such other acts necessary or proper to effectuate      the purposes of this chapter.         g.  The board of directors, in its discretion, may from time      to time refund excess amounts to member insurers that are not needed      for current or projected liabilities of a particular insolvency.  The      amount of each refund is equal to the net direct written premiums of      the member insurer for the preceding calendar year divided by the net      written premiums of all member insurers for the preceding calendar      year, multiplied by the total amount to be refunded to all members.      Any assessments or refunds of any member insurer in amounts not to      exceed twenty-five dollars may, at the discretion of the board of      directors, be waived.         h.  Request that all future payments of workers' compensation      weekly benefits, medical expenses, or other payments under chapter      85, 85A, 85B, 86, or 87 be commuted to a present lump sum and upon      the payment of which, either to the claimant or to a licensed insurer      for purchase of an annuity or other periodic payment plan for the      benefit of the claimant, the employer and the association shall be      discharged from all further liability for the workers' compensation      claim.  Notwithstanding the provisions of section 85.45, any future      payment of medical expenses, weekly compensation benefits, or other      payment by the association under this chapter pursuant to chapter 85,      85A, 85B, 86, or 87, is deemed an undue expense, hardship, or      inconvenience upon the employer for purposes of a full commutation      pursuant to section 85.45, subsection 1, paragraph "b", and the      workers' compensation commissioner shall fix the lump sum of the      probable future medical expenses and weekly compensation benefits      capitalized at their present value upon the basis of interest at the      rate provided in section 535.3 for court judgments and decrees.  
         Section History: Early Form
         [C71, 73, 75, 77, 79, 81, § 515B.5; 82 Acts, ch 1051, § 2] 
         Section History: Recent Form
         86 Acts, ch 1184, § 6; 88 Acts, ch 1112, § 507; 91 Acts, ch 26, §      44; 92 Acts, ch 1162, § 40, 41; 97 Acts, ch 186, §15, 16; 98 Acts, ch      1061, §11; 2001 Acts, ch 69, §32; 2002 Acts, ch 1111, §20, 21; 2008      Acts, ch 1032, §200         Referred to in § 515B.6, 515B.9